Killer Credit Card Rewards

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momopi - my parent's fly to asia every once in a while, United has a deal where you can redeem miles on flights operated by Asiana Airlines. I don't know the details, but you can try United's link



I got an AMEX card through Costco. Pay it off every month (just like almost everyone else in IHB world). Rewards aren't that great, and you can only redeem them at Costco... but this way I never run out of toilet paper... :)
 
I have a GM Card - 5% off a GM car. Did me great when I bought my Malibu. But 10 years later, it's still doing great, plus I inherited a car when my dad passed away, so now it's turning out to be a waste (you only keep rewards for 7 years). Now I figure - surely by the time my Malibu is 17 years old I'll want to replace it, so I should keep using it.



I agree cards tempt you to spend. It's easier and feels more casual. But even with a card, I'm plenty responsible, and as long as I am, it makes sense to make purchasing easier (especially online) and get some rewards in the process.
 
Credit card rewards are one of the few free lunches in the world these days. We only have one reward card, we charge all of life's daily pleasures and bills on it, pay it off every month and see the rewards every so often. Even the most frugal person can spend a couple thousand a month, and the rewards add up. The only thing to remember is to pay it off every month. That's not so hard, especially for people horrified of 20% interest rates. We set up the monthly payments electronically through the billpayer website from our credit union, which electronically transfers money to the credit card company at a specified date, so we never worry the payment will be late (and if it is the credit union argues on our behalf if the date of the payment is before the due date).
 
I carry Amex Platinum card. I like it only because of the airport club access. With this card, I get access to the airport lounge for NW, Continental, Delta, and America. I found the international airline program ( free companion business class ticket) not as useful as it apperas on paper as I can always find cheaper deals. I haven't used the new domestic companion ticket feature yet. I do cash out my amex points for dinner at Roys - $100 for 10, 000 points. Since I travel a lot, 10,000 points is not difficult to reach in several months.
 
I also have to agree with IR that with credit card, one tend to spend more. My wife and I have been trying to spend cash instead of charging for daily expenses. For us, there is a noticeable differences on spendings.
 
<p>I also do the bal transfer things. But the banks are starting to charge 3% balance transfer fee with no cap vs. the old $75 cap. Currently, I have a $20,000 balance on one of my b of a cards they offered me 0% interest for one year with a $75 bal transfer fee. I am making more than 3% tax free right now. That $600 is my wine money!! </p>

<p>I was also offered 0% bal transfer from citibank. But they want 1200 dollar bal transfer fee on cashing out my $40,000 credit line. They are evil...</p>
 
<p>I do about $300,000 a year with one vendor. The rewards add up pretty quick if you can pay with a CC (I was writing checks before, old vendor wouldn't take a CC).</p>

<p>My plan was to do the Costco Amex. 5% for fuel, 3% for dining, 2% for traveling, and 1% for everything else. No caps. I'm going to have to reevaluate further based on this thread.</p>
 
<p>What about annual fees on the CC's? Those are not cool. I was refering to credit cards w/ mileage rewards.</p>

<p>I have only one credit card (no annual fee) and will be keeping it that way. </p>

<p>Used to have two, but never used the second card. Finally called the company to close the account, and of course the person's job over the phone is to not let you close the account. </p>

<p>Credit card company: We can match whatever your current primary card has..


Me: I memorized my primary's card number, expiration date, and security code. I can't memorize this card's number.


True story. </p>

<p> </p>
 
Um, have never paid an annual fee for any of my CC in my life. Its not difficult to find a CC that doesn't have one.



Irvine123, I never thought those balance transfers were worth doing, because once you do one, any debt repayments you make go towards the balance transfer, not your new balance. So unless you just open a card for the purpose of holding a balance for 3-12 months (or whatever the 0% term is) and then paying it off, I don't see the point. Well, I guess I just answered my own question. :P
 
IrvineAllergyDr,



you are right. You shouldn't use that card for any other purposes if you want to truely get the value of out the transfer. I have several cards accumulated in the past, and I never closed it since it will reduce my credit score due to the size of the credit line I have. I use only the AMEX, and everything else is just sitting there. So, when I do bal transfers, it is just that. also, i schedule all payments ahead to make sure the bal is paid off one week before the expiration of the 0% interest offer. Again this is not for everyone, as if you don't plan it well, you get screwed. Takes me 30 mins to take care of this paper trail, then I can sit back and enjoy my $600 worth of wine! ^_-



I think this is probably the last one I will do, as the bal transfer fee is no longer capped, which makes it it absolutly not worth doing.
 
<p>You can blame Congress, esp. Joseph Biden the distinguished gentleman from Delaware, for the removal of the cap. Biden pushed through the Credit Card bill that was disguised as a "consumer protection" bill but was really a way for CC companies to increase fees and increase minimum payments. Biden was also the one who pushed through the wonderful BK law that we have now. It is utterly ridiculous for the man to call himself a democrat. </p>

<p>Here is a great program done by Frontline (PBS) a few years ago regarding CCs. If you have the time, I highly recommend watching it. </p>

<p><a href="http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/">www.pbs.org/wgbh/pages/frontline/shows/credit/view/</a></p>

<p>Personally, I think they are great. I do not have to carry cash with me and allows me to buy things quickly and have a final statement at the end of the month to track my spending. I do not have to go to the bank every week and try and remember what I bought or where I spent money on. One does have to be careful and prudent about CC though. The rewards are great. I think we have gotten about $1000 in gift cards for doing nothing more than doing what we usually do. My favorite card is the Citibank Diamond Preferred Card. . .great rewards and 5% for gas, groceries, and drug stores and 1% for everything else. Citibank (despite its stupid business acquisitions) have great reward programs. </p>

<p>BTW: If you have been a "good" customer, CC companies go out of their way to help you. I have had fees taken away and replacement cards overnighted to me because I pay my bills off 99.9 percent of the time.</p>
 
Both Citi and BOA credit cards used to give me 5% cash back for gas and grocery, 1% on everything else. After about a year of charging a whole lot on these cards but never carried a balance, they each put a cap on the maximum reward of $500. After another year of the same, they lowered the cash back to 3% on gas and grocery, 1% on everything else. Then a $300 and $250 cap followed. I know it's still a free lunch, but I somehow felt cheated. Now, being overseas, these credit card are definitely worthless to me since they charge an arm and a leg for the currency conversion service.
 
this is how credit card use might encourage more spending without you realizing it. let's say you have $2000 of disposable income each month after expenses. you get your paycheck twice a month so basically it's $1000 to spend every 2 weeks in a world without credit cards.





you want to buy a new tv which costs $2000. you could not spend anything for the next month so you could buy that tv. more realistically, you still have to spend a bit here and there, but even if it was just a little bit a money, it would require you to push back the purchase for another 2 weeks. so you might be looking at 6 weeks until you get that new tv. it's the full $2000 in hand (or at least in your checking acct) or bust. you would be encouraged to save or spend less on ordinary purchases because every little bit you spend could push your goal back by weeks at a time, i.e. there is a constraint on your ability to spend normally.





these days you would just buy the tv today since you won't need to pay for it for anywhere between 4-6 wks depending on when it is in your cc cycle. before that pymt is due, in that time two or three pay periods have passed and you could certainly pay it off, so interest is a non-factor. you would look back and say you would have bought the tv no matter what, i.e. your spending habits were no different with and without cc's. that's the common remark that everyone gives. but in the meantime you will likely still spend normally on everything else as opposed to notching down your ordinary spending because the purchase of the tv puts no constraint on that. you can both afford to do both and stay well within your budget.





its the subtle difference between saving for a goal and spending within a budget. the use of credit cards means americans are now looking at spending in a top-down approach as opposed to bottoms-up. ask someone to balance spending and savings in a way which maximizes both, while constraining incoming cashflows, is likely to yield extremely different spending habits than if cashflows were given freely but spending is capped.





it's really not that different than than the mentality which allowed people to say, "i can afford the mortgage payments so what's the big deal?"
 
all we do is charge life's basic expenses to it, never major purchases. as long as you do that, it's a free lunch. of course, not everyone can do that, but that's the free world.
 
Now that debit cards are accepted virtually everywhere, I don't have much reason to use cash or a credit card. The only times I bust out the true credit card are when they demand one (i.e. car rental counter) or when I don't fully trust the vendor and may want to contest a charge (internet and international purchases). I think the credit card companies are very smart to offer airline miles, knowing full well we'll likely overspend on fancy meals, activities, and souvenirs on our "free" vacation.
 
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